Commodity Calls

NCDEX-Soybean can dip before reversing higher

Gurumurthy K BL Research Bureau | Updated on March 12, 2019 Published on March 12, 2019

Soybean prices have been falling over the last few weeks. The Soybean futures contract on the National Commodity and Derivatives Exchange (NCDEX) hit a high of ₹3,915 per quintal this January and has been falling since then. The contract has tumbled over 7 per cent from this high and is currently trading at ₹3,632 per quintal.

The downtrend that began in January remains intact and there is room for a further fall in the short term. The 21-day moving average, at ₹3,705, has been capping the upside for the contract since February. As long as the contract trades below this hurdle, a fall to ₹3,500 or ₹3,450 is possible in the short term.

The region between ₹3,500 and ₹3,450 is a crucial support for the contract. A break below this support zone looks less probable as fresh buyers may emerge at lower levels. A strong upward reversal from this support zone can take the contract higher to ₹3,600. A further break above ₹3,600 will then increase the likelihood of the contract revisiting ₹3,800 and ₹3,900 levels.

A strong break and a decisive close above ₹3,900 will then boost the momentum. Such a break will then pave way for a fresh rally to ₹4,100 and ₹4,200 over the medium term.

Traders with a medium-term perspective can make use of dips and go long near ₹3,535 and can also accumulate at ₹3,475. A stop-loss can be placed at ₹3,410 for the target of ₹3,850. Revise the stop-loss higher to ₹3,575 as soon as the contract moves up to ₹3,625.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

Published on March 12, 2019
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